Complex tax rules hit foreign Pride fighters

BY NOBUYOSHI NAKAMURA AND KOTA FUNAHASHI

THE ASAHI SHIMBUN

They may have had no problems grabbing opponents' necks, locking legs in submission holds or pinning rivals' backs to the mat. But a number of top foreign fighters in the former Pride mixed martial arts battles could not grasp Japan's complicated tax rules.

The Tokyo Regional Taxation Bureau examined the earnings of nearly 10 fighters and found at least five of them failed to pay a combined 20 million yen in consumption tax on their winnings between 2004 and 2006, sources said Thursday.

The five included Mirko Cro Cop, whose real name is Mirko Filipovic, from Croatia, Brazilians Wanderlei Silva and Antonio Rodrigo Nogueira, and Mark Hunt from New Zealand, according to the sources. The five have filed corrected returns, the sources said.

In principle, Japanese promoters deduct income tax when they pay athletes of foreign nationalities.

However, foreign athletes are required to pay the consumption tax on their own if they earn 10 million yen or more a year in prize money and other income in Japan. Complicating the matter is the fact that the income of two years before is used as criteria to decide if the person has to pay the consumption levy for the latest year's income.

Foreign athletes are regarded as taxable sole proprietors, and their earnings are regarded as sales revenues, which are subject to the consumption tax as well as income tax.

But few foreign athletes understand the confusing tax rules and procedures, often resulting in a failure to file consumption tax returns. Professional golfers, jockeys and other athletes who repeatedly visit Japan for short stays have also failed to provide proper tax returns on the consumption tax.

Behind the growing number of failures are revisions in 2005 to the taxation rules.

The consumption tax rule used to apply to earnings of 30 million yen or more a year. The revisions lowered the income level to 10 million yen, resulting in more foreign athletes required to pay.

A representative of a Brazilian fighter told The Asahi Shimbun that his client is willing to fulfill the necessary tax obligations.

"(The athlete) was not informed at all about the obligation to pay the indirect tax by himself," the agent said.

Tax authorities inspected nearly 10 foreign Pride fighters who had visited Japan every year through 2006, according to people involved in Dream Stage Entertainment, the now-defunct Pride promoter in Japan, and those associated with martial arts contests in Brazil and other nations.

Dream Stage Entertainment was dissolved in April 2007.

The liquidator of Dream Stage Entertainment said similar problems have not occurred since the tax inspection because fighters and their managers were informed about the tax requirements.

The once-hugely popular Pride events were suspended in Japan last year following the discontinuation of terrestrial broadcasts of the fights.

Dream Stage Entertainment transferred promotion of Pride events to another company, but the successor closed down in October 2007.(IHT/Asahi: May 9,2008)